Paying attention to real options

Barnett, Michael L. (2005) Paying attention to real options. R & D Management, 35 (1). pp. 61-72.


The strategy literature is increasingly focused on the need to create dynamic capabilities to respond with innovative product offerings in‘hypercompetitive’ environments. The real options approach offers hope for managers facing such threatening environments by highlighting methods to hold options on a variety of possible future states, thereby reducing risk without bearing all the costs. However, extant real options literature, stemming from rational-based financial assumptions, does not consider attention as a limited resource. Real options are valued on the assumption that management can exploit the flexibility inherent in projects, and so require management attention to obtain their full theoretical value. This paper brings attentional constraints to bear on the real options framework and describes a conceptual framework that illustrates the real option value realization process.

Item Type: Article
Keywords: strategic planning; international markets
Subject(s): Strategy; Entrepreneurship & Global business
Centre: Faculty of Strategy, Entrepreneurship and International Business
Date Deposited: 18 Nov 2011 15:50
Last Modified: 23 Oct 2015 14:05

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